While the rest of the market is taking a breather from the extended rally, utilities are pulling ahead.
Utilities have been the best performing sector over the past 4 weeks with the Utilities Select Sector SPDR Fund (XLU) up nearly 9% compared to 4% for the broader market.
Part of the reason for the improved performance on the part of utilities is the increasing resistance to the heavy handed tax schemes proposed by the Obama administration that would punish utilities that rely predominately on coal to generate electricity. In a key concession to get the Climate Tax bill through the House of Representatives on Friday, Democratic leaders agreed to give away to the business community more than 60% of pollution permits in the early years of the program.
XLU invests in electric utilities, gas utilities, multi-utilities and independent power producers & energy traders that are in the S&P 500. Top holdings include Exelon Corp, Southern Company and FPL Group.
An ETF that with a broader representation across the Utilities space is the Vanguard Utilities ETF (VPU).
VPU has holdings in large, medium, and small U.S. companies in the utilities sector including electric, gas, or water utilities, or companies that operate as independent producers and/or distributors of power.